We have all heard it – many times. Virtually every lawyer in every firm gets this question, and lawyers that focus on employment law get it monthly, at least.
Client: “Hey, I signed a non-compete agreement a few years ago. It’s not really enforceable, is it?”
Lawyer: “What makes you think it’s not enforceable?”
Client: “My uncle told me that they can’t enforce these things.”
Lawyer: “Is your uncle a lawyer?”
Lawyer: “Do you live in California?”
Lawyer: “Is your uncle from California.”
Lawyer: “Then your uncle is wrong and you have a problem.”
The fact is that unless the employer is based in California, Oklahoma or North Dakota, where non-competes are banned as against public policy, or the employee lives and primarily works in one of those states, non-compete provisions generally are enforceable.
The next question often falls along the following line: “Yes, but my employer never tries to enforce these non-competes. They just use them to keep people from leaving.”
Although it is true that employers do not always enforce, or appear to enforce, non-compete agreements, it is rarely the case that they simply ignore an employee who goes to work for a competitor after resignation or termination. Often, the particular employee in fact is not working in violation of a non-compete covenant, or has negotiated with the employer a mutually agreeable modification or waiver of a non-compete covenant, or the employer has concluded that the cost of enforcement as to that particular employee is not worth the potential benefit.
In one recent case, an employer asked whether declining to pursue enforcement of a non-compete agreement against a former employee would adversely affect the employer’s ability to enforce the non-compete as to other employees. When asked why they did not want to pursue in the present case, the employer confided that the former employee was so bad at his job that they actually wanted him to work for the competition in the hope that he would drive back the business he had cost them while employed.
The mere fact that an employer has a history of selective non-enforcement of its non-compete covenants should not be taken as a waiver of an otherwise enforceable non-compete covenant. Experience shows that the better an employee is at his or her job, the more likely it is that the employer will seek to enforce the employee’s non-compete obligations.